<PAGE>
FORM 6-K
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
COMMISSION FILE NUMBER 0-15577
FOR THE MONTH OF APRIL 1998
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION
------------------------------------------
(Translation of registrant's name into English)
1801 Broadway, Suite 1620
-------------------------
Denver, Colorado 80202
----------------------
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--------- ---------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
----- -----
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- .
-------
ENCLOSED IS 1) PRESS RELEASE #98-008; AND 2) THE INFORMATION CIRCULAR,
CONTAINING PROXY AND NOTICE OF EXTRAORDINARY GENERAL MEETING; BOTH FOR
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION.
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION
(Registrant)
Date: April 16, 1998 /s/ Jorge E. Ordonez C.
--------------- --------------------------------------------------
By: Jorge E. Ordonez C., Acting President and CEO
<PAGE>
DENVER, CO - APRIL 15, 1998
#98 - 008
7:30 AM MST
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION ANNOUNCES
INCREASED PACHUCA ORE RESERVES
Consolidated Nevada Goldfields Corporation ("CNGC") announces a considerable
increase in proven and probable ore reserves for its Pachuca operations located
in Hidalgo, Mexico. As of December 31, 1997, the proven and probable reserves
were as follows (rounded out):
<TABLE>
<S> <C>
Tonnes 7,800,000
Grams Silver per Tonne 264
Grams Gold per Tonne 1.40
Contained Ounces Silver 66,200,000
Contained Ounces Gold 351,000
</TABLE>
These reserves represent an increase in contained ounces of 14.77 million ounces
of silver (about 29 percent) and 111,000 ounces of gold (about 46 percent) over
the previous year's reserves at Pachuca. COO Mike Kolin comments, "Strong
silver prices have not only increased our Pachuca mine reserves but have also
made the Pachuca tailings recovery project (approximately 90 million tonnes at
over 1.5 oz Ag equivalent per tonne) warrant a pilot plant and feasibility study
during 1998." A recently completed prefeasibility study confirmed that the
retreatment project is profitable at a production rate of 30,000 tonnes per day
using standard CIP/CIL technology. A positive feasibility study could add
almost 50 million ounces of silver to the Pachuca reserves.
Consolidated Nevada Goldfields Corporation is a Denver-based, international
mining company producing silver, gold, and copper from three operating
properties in the U.S.A. and Mexico. Total Company reserves include 66.2
million ounces of silver as of 1997 and 740,000 ounces of gold as of 1996. The
Company's principal property is the Pachuca silver mine, which has continuously
produced silver for five centuries, in central Mexico north of Mexico City. The
Company shares trade on the Toronto Stock Exchange under the symbol KNV; on
NASDAQ under the symbol KNVCF; and on the Stuttgart, Frankfurt, and Berlin
exchanges under the symbol CNV.
Statements in this release which are not historical data are forward looking and
involve a number of risks and uncertainties, including but not limited to the
price of commodities, currencies, production, construction, and permitting or
regulatory delays, reserve estimation of tonnage, grade and metallurgical
recoveries, exploration success and reserve growth, litigation, capital costs,
and other risks that are detailed in the Company's SEC filings.
CONTACT: Consolidated Nevada Goldfields Corporation, Denver, Colorado
Phone (303) 296-3200 Fax (303) 296-9130
<PAGE>
- 3 -
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION
INFORMATION CIRCULAR
SOLICITATION OF PROXIES
THIS INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH THE
SOLICITATION BY THE MANAGEMENT OF CONSOLIDATED NEVADA GOLDFIELDS CORPORATION
(HEREINAFTER REFERRED TO AS THE "COMPANY") OF THE PROXIES TO BE USED AT THE
SPECIAL MEETING (THE "MEETING") OF THE SHAREHOLDERS OF THE COMPANY TO BE HELD
ON MAY 12, 1998, AT 9:00 A.M. (TORONTO TIME) AT THE OFFICES OF STIKEMAN,
ELLIOTT, COMMERCE COURT WEST, SUITE 5300, 199 BAY STREET, TORONTO, ONTARIO
M5L 1B9.
The solicitation will be by mail and possibly supplemented by telephone or
other personal contact to be made without special compensation by regular
officers and employees of the Company. The Company does not reimburse
shareholders, nominees or agents for the cost incurred in obtaining from their
principals authorization to execute forms of proxy. No solicitation will be
made by specifically engaged employees or soliciting agents. The cost of
solicitation will be borne by the Company.
REVOCABILITY OF PROXY
Any shareholder returning the enclosed form of proxy may revoke the same at
any time insofar as it has not been exercised. In addition to revocation in any
other manner permitted by law, a proxy may be revoked by instrument in writing
executed by the shareholder or by his attorney authorized in writing or, if the
shareholder is a corporation, under its corporate seal or by an officer or
attorney thereof duly authorized, and deposited at the offices of the Montreal
Trust Company of Canada (the "Registrar and Transfer Agent") at any time up to
and including the last business day preceding the day of the Meeting, or any
adjournment thereof, at which such proxy is to be used, or with the Chairman of
such Meeting on the day of the Meeting, or adjournment thereof, and upon any of
such deposits the proxy is revoked.
EXERCISE OF DISCRETION BY PROXYHOLDERS
The persons named in the enclosed form of Proxy will, on a poll, vote or
withhold from voting, or vote as instructed, the common shares of the Company
(the "Common Shares") in respect of which they are appointed in accordance with
the instructions of the shareholders appointing them. In the absence of such
direction such Common Shares will, on a poll, be voted IN FAVOUR of those
matters set out in the enclosed proxy and at the discretion of the proxyholder
with respect to other matters that may come before the meeting. THE ENCLOSED
FORM OF PROXY CONFERS DISCRETIONARY AUTHORITY UPON THE PERSONS NAMED THEREIN
WITH RESPECT TO AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN THE PROXY AND
WITH RESPECT TO OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING. At
the time of printing of this Information Circular, the directors and senior
officers know of no such amendment, variation or other matter expected to come
before the Meeting other than those set out herein. If any matters which are
not now known to the directors and senior officers should properly come before
the Meeting, the persons named in the accompanying form of Proxy will vote on
such matters in accordance with their best judgment.
<PAGE>
- 4 -
The persons named in the enclosed form of proxy are officers of the
Company. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO ATTEND AND ACT FOR HIM ON HIS BEHALF AT THE MEETING OTHER THAN
THE PERSONS DESIGNATED IN THE ENCLOSED FORM OF PROXY. SUCH RIGHT MAY BE
EXERCISED BY STRIKING OUT THE NAMES OF THE PERSONS DESIGNATED IN THE ENCLOSED
FORM OF PROXY AND BY INSERTING IN THE BLANK SPACE PROVIDED FOR THAT PURPOSE THE
NAME OF THE DESIRED PERSON OR BY COMPLETING ANOTHER PROPER FORM OF PROXY AND, IN
EITHER CASE, DELIVERING THE COMPLETED AND EXECUTED PROXY TO THE COMPANY OR ITS
TRANSFER AGENT NOT LESS THAN 48 HOURS, EXCLUDING SATURDAYS AND HOLIDAYS, BEFORE
THE TIME FOR HOLDING THE MEETING OR ANY ADJOURNMENT THEREOF.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The following information relates to the authorized and issued capital of
the Company and other related information:
Authorized Capital: Unlimited number of Common Shares without par value and
20,000,000 preference shares with a par value of
Cdn.$1.00 each.
Issued and Outstanding
as of April 14, 1998: 360,957,284 Common Shares and no preference shares.
Only common shareholders of record on April 14, 1998 (the "Record Date")
shall be entitled to receive notice of and vote at the Meeting. Any transferee
of Common Shares after the Record Date shall be entitled to vote his, her or its
shares if the procedure set forth in the accompanying notice of meeting is
followed. Each Common Share carries one vote.
To the knowledge of the directors and senior officers of the Company, the
following are the names of all persons or companies who or which beneficially
own, directly or indirectly, or exercise control or direction over, equity
shares carrying more than 10% of the voting rights attached to all shares of the
Company:
<TABLE>
<CAPTION>
NAME AND MUNICIPALITY OF RESIDENCE NUMBER OF SHARES PERCENTAGE
<S> <C> <C>
Grupo Acerero del Norte,
S.A. de C.V.,(1) Mexico 264,026,559 73%
</TABLE>
(1) Grupo Acerero del Norte, S.A. de C.V. ("GAN") is a private Mexican company
which owns 264,026,559 Common Shares, representing approximately 73% of the
outstanding Common Shares. In addition, GAN holds warrants of the Company
exercisable into an aggregate of 26,998,400 Common Shares at an exercise
price of U.S.$0.125 per share on or before February 24, 2003.
<PAGE>
- 5 -
PERFORMANCE GRAPH
The Common Shares trade on The Toronto Stock Exchange (the "TSE") and
elsewhere.
The following graph shows the yearly percentage change in the cumulative
shareholder return on the Common Shares compared to the cumulative total return
of the TSE 300 Index and the TSE Gold and Precious Metals Group Index for the
past six fiscal years, assuming an investment of Cdn.$100 on June 30, 1992 and
the reinvestment of dividends during such period.
CUMULATIVE TOTAL RETURN(1)
GRAPH NOT AVAILABLE, PLEASE SEE CHART BELOW.
<TABLE>
<CAPTION>
Jan. 1 - July 1 -
June 30, Dec. 31,
1992 1993 1994 1995 1996 1996(1) 1997
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED 100 129.00 277.35 180.61 274.15 209.64 58.05
NEVADA
GOLDFIELDS
CORPORATION
TSE 300 100 120.83 125.58 144.63 164.78 195.49 224.77
INDEX
TSE GOLD & 100 192.58 198.57 200.15 233.38 239.14 135.93
PRECIOUS
METALS GROUP
</TABLE>
(1) In December, 1996, the Board of Directors approved the change of financial
year-end of the Company from June 30 to December 31. As a result, the
December, 1996 year end reflects the period from July 1, 1996 to December
31, 1996.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED ON
No director or senior officer, or person who has been a director or senior
officer since the beginning of the Company's last financial period, or any
associate or affiliate of such persons, or any person on behalf of whom this
solicitation is made, has any interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted upon at the
Meeting.
EXECUTIVE COMPENSATION
The aggregate compensation received by the Company's present and past named
executive officers during the most recently completed financial year ended
December 31, 1997 was approximately US$703,545 including all salaries, fees,
commissions, bonuses and severance payments.
The summary of the executive compensation of the named executive officers
of the Company for
<PAGE>
- 6 -
the three most recently completed financial years is as follows:
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM
COMPENSATION
- ------------------------------------------------------------------------------------------------
NAME AND OTHER SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS ANNUAL UNDER COMPENSATION
(10) (10) COMPENSATION OPTIONS (9)(10)
(8) (10) GRANTED (#)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alex Bissett(1) 1997 135,226 Nil 2,308 400,000 Nil
President and Chief
Executive Officer
- ------------------------------------------------------------------------------------------------
Geoffrey Hoyl(2) 1997 84,519 Nil Nil Nil 50,000
President and Chief 1996(7) 96,539 50,000 Nil Nil Nil
Executive Officer 1996 185,961 40,000 Nil Nil Nil
1995 131,947 Nil Nil Nil Nil
- ------------------------------------------------------------------------------------------------
Jesus Teodoro Meson 1997 65,000 20,000 Nil 15,000 Nil
Haro(3) 1996(7) 59,189 20,000 Nil Nil Nil
Chief Financial 1995 50,000 20,000 Nil Nil Nil
Officer,
Mexican Subsidiaries
- ------------------------------------------------------------------------------------------------
G. Chaun Cadwell(4) 1997 127,209 Nil 5,900 Nil Nil
Vice President and 1996(7) 75,700 Nil Nil Nil Nil
Chief Operating
Officer
- ------------------------------------------------------------------------------------------------
James R. Maronick(5) 1997 76,567 20,000 5,794 Nil Nil
Vice President, 1996(7) 49,423 Nil 2,666 Nil Nil
Finance, Secretary, 1996 78,269 10,000 5,296 Nil Nil
Treasury and Chief 1995 54,730 Nil 1,280 100,000 Nil
Financial Officer
- ------------------------------------------------------------------------------------------------
Paul Blair(6) 1997 97,308 Nil 2,464 30,000 11,250
Vice-President, 1996(7) Nil Nil Nil Nil Nil
North American
Operations
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Bissett was appointed President and Chief Executive Officer of the
Company on April 29, 1997 and resigned his position on March 6, 1998.
Jorge E. Ordonez is currently the Acting President and Chief Executive
Officer of the Company.
(2) Mr. Hoyl resigned as an officer and director of the Company on April 11,
1997.
(3) Mr. Meson is the Chief Financial Officer of each of the subsidiaries of the
Company located in Mexico.
(4) Mr. Cadwell was appointed Vice President and Chief Operating Officer of the
Company on June
<PAGE>
- 7 -
10, 1996. Mr. Cadwell resigned as an officer of the Company on July 31,
1997. Mike Kolin was appointed as the Chief Operating Officer of the
Company on March 23, 1998.
(5) Mr. Maronick resigned as an officer of the Company on September 5, 1997.
(6) Mr. Blair was appointed Vice President, North American Operations in
November, 1996. Mr. Blair resigned as an officer on August 21, 1997.
(7) In December 1996, the Board of Directors approved the change in the
Company's financial year-end from June 30 to December 31. Figures shown
are for the financial year ended December 31, 1996 which was six months in
length (July 1, 1996 - December 31, 1996).
(8) The Company has a 401(k) Savings Plan, pursuant to which the Company
matches the contribution of employees up to a maximum of 6% of their
salary.
(9) Amounts represent severance benefits paid to respective officers.
(10) Amounts shown in U.S. dollars except for Securities Under Options Granted.
OTHER COMPENSATION MATTERS
There were no long-term incentive awards made to any executive officer of
the Company during the financial year ended December 31, 1997. There are no
pension plan benefits in place for the executive officers or directors except as
set forth in the foregoing.
EMPLOYMENT CONTRACTS
The Company has no employment contracts in place with respect to named
executive officers currently in the employ of the Company. Additionally, the
Company has no compensatory plan or arrangement with respect to its executive
officers that results or will result from the resignation, retirement or any
other termination of employment of such executive officer's employment with the
Company from a change of control of the Company or a change in the
responsibilities of the executive officer following a change of control.
COMPOSITION OF THE COMPENSATION COMMITTEE
The compensation committee is comprised of Mr. Alonso Ancira and Mr. James
Bishop. The compensation committee and Board of Directors intend to remunerate
executive and other officers on the basis of the amount of time and attention
such officers devote to the affairs of the Company, comparable amounts paid to
officers of similar companies performing similar functions and other criteria
that the compensation committee and Board of Directors consider relevant from
time to time.
STOCK OPTION PLAN
PLAN TERMS AND GRANTED OPTIONS
The Company has a stock option plan (the "Plan") which was modified in
December, 1994 pursuant to which 5,000,000 Common Shares are reserved for
issuance in accordance with the Plan. The Plan was modified in December, 1994
such that the exercise price of such shares shall be the closing market price of
the Common Shares on the TSE on the day preceding the day on which the option
was granted. The duration of the options may not exceed ten years and the
options terminate upon the expiration of three months if a participant ceases to
be an officer, employee or a director of the Company. The Plan also provides
that the board of directors may, at its sole discretion, extend such termination
period by an additional 12 months. Further, the options are not assignable.
The Company granted stock options during the financial year ended December 31,
1997 as summarized in the following table:
<PAGE>
- 8 -
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
% OF TOTAL EXERCISE MARKET EXPIRATION
NAME SECURITIES UNDER OPTIONS GRANTED OR BASE VALUE OF DATE
OPTIONS GRANTED TO EMPLOYEES IN PRICE SECURITIES
(#) FINANCIAL YEAR (CDN.$) UNDERLYING
OPTIONS ON
DATE OF
GRANT
(CDN.$)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alex Bissett(1) 400,000 59.7% $0.81 $0.80 March 6, 1998
- ----------------------------------------------------------------------------------------------------------------------
Jesus Teodoro 15,000 2.2% $0.81 $0.80 July 28, 2007
Meson Haro
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As part of Mr. Bissett's termination agreement, the expiration date of the
options granted was changed from July 28, 2007 to March 6, 1998.
OPTIONS EXERCISED AND AGGREGATE REMAINING
The following table summarizes each option exercised during the most
recently completed financial year by each of the named executive officers and
the financial year end value of unexercised options on an aggregate basis:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY
DECEMBER 31, 1997 OPTIONS AT
DECEMBER 31, 1997(1)
- -------------------------------------------------------------------------------------------------------------
SECURITIES AGGREGATE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ACQUIRED VALUE (SHARES) (SHARES) (Cdn$) (Cdn$)
ON REALIZED
EXERCISE (Cdn$)
(SHARES)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alex Bissett(2) Nil Nil 400,000 Nil Nil Nil
- -------------------------------------------------------------------------------------------------------------
Geoffrey Hoyl(3) Nil Nil 400,000 Nil Nil Nil
- -------------------------------------------------------------------------------------------------------------
Jesus Teodoro Nil Nil 15,000 Nil Nil Nil
Meson Haro
- -------------------------------------------------------------------------------------------------------------
James R. Nil Nil 100,000 Nil Nil Nil
Maronick(4)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the closing price of the Common Shares on the TSE on December 31,
1997 of Cdn. $0.36.
(2) Mr. Bissett resigned as President and Chief Executive Officer of the
Company on March 6,
<PAGE>
- 9 -
1998.
(3) Mr. Hoyl resigned as an officer and director of the Company on April 11,
1997. The board of directors has agreed, under special terms, that Mr.
Hoyl's options will terminate 24 months from the date of Mr. Hoyl's
resignation.
(4) Mr. Maronick resigned as an officer of the Company on September 5, 1997.
OTHER COMPENSATION
Other than as indicated on the Executive Compensation Table on page 5, no
other compensation was paid by the Company to the named executive officers
during the most recently completed financial year ended December 31, 1997,
including personal benefits and securities or property paid or distributed other
than pursuant to a formal plan, which compensation is not offered on the same
terms to all full time employees and there are no plans or other arrangements in
place with respect to the termination of employment or change in
responsibilities of the named executive officers.
COMPENSATION OF DIRECTORS
The directors who are not otherwise officers of the Company receive
U.S.$2,000 per meeting for meetings attended and are reimbursed for expenses
incurred to attend a meeting or to otherwise participate in the affairs of the
Company. No amount was paid as fees to directors for the financial year ended
December 31, 1997.
None of the directors of the Company, in their capacity as a director of
the Company and its subsidiaries during the most recently completed financial
year, were compensated pursuant to any other arrangement or in lieu of any
standard arrangement including the granting of stock options under the
Company's Stock Option Plan. During the financial year ended December 31,
1997, no options were granted to directors.
REPORT ON EXECUTIVE COMPENSATION
The Company's compensation committee is composed of Mr. Alonso Ancira and
Mr. James Bishop who are identified above. It is the responsibility of the
compensation committee to determine the level of compensation in respect of the
Company's senior executives with a view to providing such executives with a
competitive compensation package having regard to performance. Performance is
defined to include achievement of the Company's strategic objective of growth
and the enhancement of shareholder value through increases in the stock price
resulting from increases in reserves and production, continued low-cost
production and enhanced annual cash flow and earnings. The compensation that
has been awarded is believed to be comparable to compensation of other
executives of other companies in the similar pursuit of precious metals reserves
and production.
In establishing compensation for executive officers, the compensation
committee takes into consideration individual performance, responsibilities,
length of service and levels of compensation provided by industry competitors.
Such compensation is composed primarily of three components; namely, base
salary, performance bonuses and the granting of stock options with an emphasis
on base salary and the granting of stock options versus cash bonuses.
Performance bonuses are considered from time to time having regard to the
above-referenced objectives.
Having regard to all relevant factors, it was determined by the
compensation committee rather than paying executive officers cash bonuses, the
most appropriate way to compensate them and to
<PAGE>
- 10 -
encourage the creation of shareholder value was to increase their earnings from
previous levels and to provide stock options where appropriate.
The compensation committee is also responsible for reviewing the Company's
manpower and succession plans to ensure that adequate plans are in place. With
the rapid growth of the Company this role has taken on added importance and the
compensation committee is pleased to report that important personnel additions
have been made in both the technical and senior financial areas of the Company.
Submitted by:
Mr. Alonso Ancira
Mr. James Bishop
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
As a company listed on the TSE, the Company adheres to the substantive
requirements of the corporate governance guidelines of the TSE. The Board of
Directors and its committees participate in all decision making processes in the
management of the Company. The Board of Directors of the Company has adopted
the following statement of corporate governance practices:
The Board acknowledges its responsibility for the stewardship of the
Company in the following ways:
(i) The Board participates in strategic planning as the acceptor and/or
adopter of the strategic plans proposed and developed by management.
The strategic planning process has been the responsibility of
management. The Board will undertake periodic reviews of the
strategic planning process.
(ii) The Board has considered and does in its deliberations consider the
principal risks of the Company's business in the mining industry
particularly having regard to sensitivity to metal prices, political
risks given the diverse location of the Company's mining operations,
environmental and operational risks, and receives periodic reports
from management as to the Company's assessment and management of
those risks.
(iii) The Board has, from time to time, considered succession issues and
takes responsibility for appointing and monitoring senior officers
of the Company.
(iv) The Board has discussed and considered how the Company communicates
with its various shareholders and periodically reviews and approves
the Company's communications with the public but has no formal
communication policy.
(v) The Board, directly and through its audit committee, assesses the
integrity of the Company's internal control and management
information systems.
(vi) The Board is directly involved in substantive issues affecting the
Company as they arise and assists management in decision making
relating to these issues.
Although senior management has extensive experience in the mining industry,
the Board
<PAGE>
- 11 -
encourages senior management to participate in appropriate professional and
personal development activities, courses and programs and the expenses
associated with these activities are paid by the Company. Further, the Board
supports management's commitment to the training and development of all
permanent employees.
The Board currently comprises six members of whom all are outside directors
(a director that is not an officer or employee of the Company) and five may be
considered to be unrelated directors (a director free from any relationship with
the Company which could materially interfere with the director's ability to act
with a view to the best interests of the Company, other than arising out of
shareholding). In determining whether the directors were related or unrelated
the Board applied the test set forth in the governance guidelines of the TSE.
GAN has the ability to exercise a majority of votes for the election of
directors, and as such is a "significant shareholder" within the meaning of the
TSE governance guidelines. Of the six-member Board, two may be considered to be
unrelated to the significant shareholder. The Board believes that having two
directors who are unrelated to the significant shareholder fairly reflects the
investment in the Company by shareholders other than the significant
shareholder.
A nominating committee has not been established to seek out candidates who
would bring independence and a business experience to the Board as the Company
believes that it has been successful in achieving these objectives without
establishing a formal committee. Further, the Company believes that the nature
of the relationships of its related directors would not adversely affect their
independence or ability to act in the best interests of the Company.
Board members are presently compensated on the basis that non-executive
directors are paid U.S.$2,000 per meeting attended and expenses are reimbursed
at cost. See "Compensation of Directors."
The Board of Directors expressly assumes responsibility for developing the
Company's approach to governance issues and is responsible for the responses to
governance guidelines. The Board has not yet developed a description of the
limits of management's responsibilities relative to the responsibilities of the
Board of Directors. Any responsibility which is not delegated to management or
a Board committee remains with the Board.
The Board has functioned, and is of the view that it can continue to
function, independently of management, as required. The Board is comprised
entirely of outside directors including the Chair of the Board. Board meetings
are held at least four times a year. The Board has on occasion met without
management present and engages in very frank and open discussion concerning the
Company and management both in the presence of management and in their absence.
If the Board believed it was appropriate and meaningful it would formalize the
process by which the Board would meet without management and for handling the
Board's overall relationship with management.
The audit committee is composed of two directors, Messrs. Xavier Autrey and
Donald Worth, both of whom are outside directors. The compensation committee is
composed of two directors, Messrs. Alonso Ancira and James Bishop both of whom
are outside directors. These committees are considered by the Board to be
adequate, together with the Board, to ensure proper governance of the Company
and supervision of management.
The roles and responsibilities of the audit committee have been
specifically defined and include review and approval of unaudited quarterly
financial statements and review of year-end audited financial statements in
conjunction with the auditors with a view to recommending their
<PAGE>
- 12 -
approval to the Board. It is also responsible for overseeing management
reporting on internal controls. The audit committee has direct communication
channels with the external auditors and operates as a liaison between the
auditors and the Board. The Company has also appointed an internal auditor who
is responsible for supervising the preparation of the financial statements and
who reports to the Chief Financial Officer as well as to the audit committee.
The compensation committee is responsible for establishing the remuneration
payable to executive officers. The Chief Executive Officer and other executive
officers are required to consult with the Board before implementing or agreeing
to matters which may materially affect the Company.
The Board has considered its size with a view to the impact of size upon
its effectiveness and has concluded that the number of directors, as presently
constituted, is appropriate for a corporation of the size and complexity of the
Company and having regard for the international scope of its operations. The
Board, as presently constituted, brings together a mix of skills, background,
ages and attitudes that the Board considers appropriate to the stewardship of
the Company. In particular, the Board represents many years of experience in
the mining industry in Canada, the United States and Mexico where its operations
are located as well as extensive legal and corporate finance experience.
The Company does not have a formal process of orientation and education for
new members of the Board. However, all current members of the Board have had
considerable experience as directors of public companies and mining companies in
particular.
The Board has not adopted a system which would enable an individual
director to engage an outside adviser at the expense of the company in
appropriate circumstances. If such an engagement were appropriate it would be
subject to the approval of the unrelated director of the Board in consultation
with the Chairman.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
None of the directors or senior officers of the Company or associates or
affiliates of said persons, have been indebted to the Company at any time since
the beginning of the last completed financial year of the Company other than
pursuant to the employee stock option plan as described under the heading
AExecutive Compensation@ herein.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
Since the commencement of the Company's last completed financial year, none
of the insiders of the Company nor any associate or affiliate of said persons
has had any material interest, direct or indirect, in any transaction which has
materially affected or would materially affect the Company or any of its
subsidiaries which was entered into where that person was an insider other than
as follows:
In 1997, the Company entered into loan agreements with GAN, Campos Eliseos
No. 1, Col. Chapultepee Polanco, Mexico, D.F., 11570, which loaned the Company
an aggregate amount of U.S.$4,400,000. In addition, the Company entered into a
loan agreement with GAN on January 30, 1998 for an aggregate amount of
U.S.$600,000.
In addition, on September 18, 1997, the Company completed a private
placement of U.S.$7,500,000 principal amount of unsecured convertible debentures
(the "Debentures") due
<PAGE>
- 13 -
September 12, 2002 and bearing interest at a rate of 10% per annum. The
Debentures are convertible into an aggregate of 13,593,507 Common Shares at a
conversion price of U.S.$0.77 per share in accordance with the terms of the
Debentures. The Debentures were purchased by four shareholders of the Company
including GAN in the principal amount of U.S.$6,000,000. The purchase price to
GAN for the Debentures was paid for in part by the cancellation of approximately
U.S.$900,000 in debt obligations owing by the Company to GAN, with the balance
of the purchase price paid for by GAN in cash.
Subsequent to the year ended December 31, 1997, the Company, on March 4,
1998 completed a private placement of a U.S.$26,000,000 principal amount,
convertible debenture with its major shareholder, GAN. The debenture is
convertible into units (the "Units") at U.S.$0.125 per Unit. Each Unit consists
of one share and 0.1298 of a warrant of the Company, bears interest at 10% per
annum and is due February 25, 2003. A total of 208,000,000 Units are issuable
upon exercise of the debenture. The purchase price for the debenture was paid
for in part by the cancellation of the above-noted U.S.$6,000,000 principal
amount Debenture issued to GAN on September 18, 1997 as well as through the
cancellation of approximately U.S.$16,000,000 in debt obligations owing by the
Company to GAN, with the balance of the purchase price paid for by GAN in cash.
Immediately following the issuance of the U.S.$26,000,000 principal amount
debenture to GAN, GAN exercised its right to convert the debenture into
208,000,000 Common Shares and 26,998,400 warrants of the Company. Each warrant
is exercisable into one Common Share of the Company on or prior to February 24,
2003. As a result of the conversion of the debenture, GAN currently holds
264,026,559 or approximately 73% of the outstanding Common Shares of the
Company, as well as the 26,998,400 warrants.
PARTICULARS OF MATTERS TO BE ACTED UPON
1. SHARE CONSOLIDATION
At the Meeting, the shareholders of the Company will be asked to pass a
special resolution (the AShare Consolidation Resolution@) to consolidate the
Company's issued Common Shares on a ten (old) for one (new) basis (the "Share
Consolidation").
EFFECT OF SHARE CONSOLIDATION
The Share Consolidation Resolution, if passed by the shareholders, will
result in each ten issued Common Shares of the Company being consolidated into
one Common Share. In calculating the number of shares held by each shareholder
after the Share Consolidation, all fractions of shares will be rounded down to
the next whole number.
PURPOSE OF SHARE CONSOLIDATION AND BOARD OF DIRECTORS' RECOMMENDATION
The Common Shares trade on the TSE and The Nasdaq Stock Market ("Nasdaq").
The closing price on April 13, 1998 of the Common Shares on the TSE was Cdn.
$0.225 and on Nasdaq was U.S.$0.156.
As a result of recent changes to its rules, Nasdaq requires all listed
securities to have a per share price in excess of U.S.$1.00. Under these
circumstances, the directors of the Company believe that the Share Consolidation
is in the best interests of, and is expected to benefit, both the Company and
its shareholders by increasing the market liquidity of the Common Shares. The
board of directors
<PAGE>
- 14 -
of the Company have concluded that the Share Consolidation is in the best
interests of the Company and the shareholders of the Company. Accordingly, the
board of directors of the Company recommends that shareholders vote in favour of
the Share Consolidation Resolution.
SHARE CONSOLIDATION RESOLUTION
The Share Consolidation Resolution is a special resolution. As such, the
affirmative vote of not less than two thirds of the votes cast at the Meeting is
required in order for it to be considered approved by the shareholders.
Accordingly, the shareholders of the Company will be asked to pass the Share
Consolidation Resolution set out as Item 1 of Schedule "A".
NO RIGHT OF DISSENT
Shareholders voting against the Share Consolidation Resolution are not
entitled to exercise any statutory rights of dissent or similar appraisal
remedies which would require the Company to repurchase their Common Shares if
the Share Consolidation Resolution is approved by shareholders and implemented
by the Company.
IMPLEMENTATION OF SHARE CONSOLIDATION
If the Share Consolidation Resolution is passed by shareholders at the
Meeting, subject to prior approval of the TSE and applicable corporate and
regulatory filings, holders of record of Common Shares as at the close of
business April 14, 1998 (the "Share Consolidation Record Date") will participate
in the Share Consolidation.
The board of directors of the Company may, in their discretion, subject to
the rules and policies of the TSE, accelerate or delay the Share Consolidation
Record Date to an earlier or later date.
2. CHANGE OF NAME OF COMPANY
The Company is asking shareholders to approve a resolution to change the
name of the Company (the "Name Change") to AReal del Monte Mining Corporation@
(the "Name Change Resolution"), subject to the approval of the regulatory
authorities. The Company intends to effect the Share Consolidation and Name
Change concurrently on the Closing Date so that the Company will begin to carry
on business under the new name "Real del Monte Mining Corporation" with the
Share Consolidation implemented.
PURPOSE OF NEW NAME AND BOARD OF DIRECTORS' RECOMMENDATION
The directors of the Company believe that the name "Real del Monte Mining
Corporation" is more reflective of the business of the Company and will be
received favourably by the market. The board of directors of the Company have
concluded that the Name Change is in the best interest of the Company and the
shareholders of the Company. Accordingly, the board of directors of the Company
recommends that shareholders vote in favour of the Name Change Resolution.
NAME CHANGE RESOLUTION
The Name Change Resolution is a special resolution. As such, the
affirmative vote of not less than two thirds of the votes cast at the Meeting is
required in order for it to be considered approved by the shareholders.
Accordingly, the shareholders of the Company will be asked to pass the Name
<PAGE>
- 15 -
Change Resolution set out as Item 2 of Schedule "A".
NEW SHARE CERTIFICATES
As soon as reasonably practicable after the Closing Date, the Company will
cause to be mailed to the shareholders of record at the close of business on the
Closing Date new share certificates representing the consolidated common shares
to which such shareholders are entitled pursuant to the Share Consolidation and
which will evidence the Name Change.
REGISTERED OFFICE
The registered office of the Company is located at Suite 5300, Commerce
Court West, Toronto, Ontario, M5L 1B9.
MANAGEMENT CONTRACTS
Management functions of the Company are substantially performed by
directors or senior officers of the Company and not, to any substantial
degree, by any other person with whom the Company has contracted.
OTHER MATTERS
Management of the Company knows of no other matters to come before the
meeting of shareholders other than those referred to in the Notice of
Meeting. Should any other matters properly be brought before the meeting, the
shares represented by the proxy solicited hereby will be voted on such
matters in accordance with the best judgment of the person voting the proxy.
The information in this circular is current to April 15, 1998 unless
otherwise noted.
DATED at Denver, Colorado this 15th day of April, 1998.
BY ORDER OF THE BOARD
(signed) Jorge E. Ordonez
Acting President and
Chief Executive Officer
<PAGE>
- 16 -
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION
SUITE 1620
1801 BROADWAY
DENVER, COLORADO
80202
NOTICE OF SPECIAL MEETING
TO THE SHAREHOLDERS
TAKE NOTICE that a Special Meeting (the "Meeting") of Shareholders
of CONSOLIDATED NEVADA GOLDFIELDS CORPORATION (the "Company") will be held on
Tuesday, May 12, 1998 at 9:00 a.m. (Toronto Time), at the offices of Stikeman,
Elliott, Commerce Court West, Suite 5300, 199 Bay Street, Toronto, Ontario M5L
1B9 for the following purposes:
(a) to consider and, if thought appropriate, to pass a special
resolution approving a consolidation of the issued Common
Shares of the Company on a ten (old) for one (new) basis so
that the issued Common Shares of the Company is consolidated
from 360,957,284 Common Shares to 36,095,728 Common Shares,
and all entitlements to fractions rounded down to the next
whole number;
(b) to consider and, if thought appropriate, to pass a special
resolution approving a change of the name of the Company
from "Consolidated Nevada Goldfields Corporation" to "Real
del Monte Mining Corporation", or such other name as
decided upon by the directors of the Company and acceptable
to the Registrar of Corporations under the CANADA BUSINESS
CORPORATIONS ACT and The Toronto Stock Exchange, and the
Company's articles be amended accordingly; and
(c) to transact such other business as may properly come before
the Meeting or any adjournment thereof.
The specific details of the matters proposed to be put before the
Meeting are set forth in the Management Information Circular accompanying and
forming part of this Notice.
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED FORM OF PROXY AND TO DELIVER OR MAIL IT
IN THE ENCLOSED ENVELOPE TO THE SECRETARY OF THE COMPANY AT THE OFFICES OF THE
COMPANY'S TRANSFER AGENT, MONTREAL TRUST COMPANY OF CANADA, 151 FRONT STREET
WEST, SUITE 605, TORONTO, ONTARIO M5J 2N1. IN ORDER TO BE VALID AND ACTED UPON
AT THE MEETING OR ANY ADJOURNMENT THEREOF, PROXIES MUST BE RECEIVED AT THE
AFORESAID ADDRESS NOT LESS THAN 48 HOURS, EXCLUDING SATURDAYS AND HOLIDAYS,
BEFORE THE TIME FOR HOLDING THE MEETING OR ANY ADJOURNMENT THEREOF.
Only holders of Common Shares of record on April 14, 1998 are
entitled to notice of and to vote at the Meeting. To the extent any such
shareholder transfers the ownership of any of his/her shares after the date and
the transferee of those shares establishes that he/she owns such shares and
demands not later than 10 days before the Meeting that his/her name be included
in the shareholders' list, such transferee will be entitled to vote such shares
at the Meeting.
Accompanying this Notice of Meeting and the Information Circular is
an Instrument of Proxy. If you are unable to attend the meeting in person,
kindly read the Notes accompanying the Instrument of Proxy enclosed herewith and
complete, date and return the Proxy within the time and to the location set out
in the Notes.
<PAGE>
- 17 -
DATED at Denver, Colorado this 15th day of April, 1998.
BY ORDER OF THE BOARD
(signed)
Jorge E. Ordonez
Acting President and Chief Executive Officer
<PAGE>
- 18 -
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION
INSTRUMENT OF PROXY
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF THE COMPANY
The undersigned hereby appoints Jorge E. Ordonez, Acting President and Chief
Executive Officer of Consolidated Nevada Goldfields Corporation (the "Company"),
or failing him, K.M. Kolin, Chief Operating Officer of the Company, or, instead
of either of them__________________________________________________ (hereinafter
called the "nominee") as proxy for and on behalf of the undersigned with full
power of substitution, to attend, act and vote for and on behalf of the
undersigned at the Special Meeting of Shareholders of the Company to be held on
May 12, 1998, and at any adjournment or adjournments thereof and thereat, as
specified below.
1. To consider and, if thought appropriate, pass a special resolution
approving a consolidation of the issued common shares of the Company on a
ten (old) for one (new) basis so that the issued common shares of the
Company is consolidated from 360,957,284 common shares to 36,095,728 common
shares, and all entitlements to fractions be rounded down to the next whole
number.
IN FAVOUR WITHHOLD
-------- --------
2. To consider and, if thought appropriate, pass a special resolution
approving a change of the name of the Company from "Consolidated Nevada
Goldfields Corporation" to "Real del Monte Mining Corporation", or such
other name as decided upon by the directors of the Company and acceptable
to the Registrar of Corporations under the CANADA BUSINESS CORPORATIONS ACT
and The Toronto Stock Exchange, and the Company's articles be amended
accordingly.
IN FAVOUR WITHHOLD
-------- --------
3. To vote with discretionary authority on such other matters as may come
before the meeting.
The undersigned hereby revokes any proxy previously given. Authority is hereby
given to the nominee (or any person authorized by the nominee) to date this Form
of Proxy as of the date of receipt thereof by the Company.
DATED this day of , 1998.
- ------------------------------- ----------------------------------
Signature of Shareholder Name of Shareholder (please print)
- ------------------------------- ----------------------------------
Address City/Province or State or Country
- -------------------------------
Number of Shares Held
<PAGE>
CONSOLIDATED NEVADA GOLDFIELDS CORPORATION
NOTES TO INSTRUMENT OF PROXY
1. The directors of the Company are not aware of any matters other than those
set out in the Proxy to come before the meeting. Provided the instructions
are certain, the shares represented by this proxy will be voted on any poll
and further, will be voted on any poll as the shareholder may have
specified. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED AS IF THE
SHAREHOLDER HAD SPECIFIED A VOTE IN FAVOUR. THE PERSON OR PERSONS NAMED IN
THE PROXY SHALL ALSO BE ENTITLED TO VOTE THE SHARES REPRESENTED BY THE
PROXY IN THEIR SOLE DISCRETION WITH RESPECT TO AMENDMENTS OR VARIATIONS TO
MATTERS IDENTIFIED IN THE NOTICE OF MEETING OR WITH RESPECT TO OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
2. IF THE SHAREHOLDER DOES NOT WISH TO APPOINT THE PERSONS NAMED IN THE
INSTRUMENT OF PROXY, HE SHOULD STRIKE OUT THEIR NAMES AND INSERT IN THE
BLANK SPACE PROVIDED THE NAME OF THE PERSON HE WISHES TO ACT AS HIS PROXY.
SUCH OTHER PERSON NEED NOT BE A SHAREHOLDER OF THE COMPANY.
3. The Instrument of Proxy will not be valid unless it is SIGNED by the
shareholder or by his attorney duly authorized by him in writing, or in the
case of a corporation, is executed under the corporate seal or by an
officer or officers or attorney for the corporation duly authorized. IF
THE INSTRUMENT OF PROXY IS EXECUTED BY AN ATTORNEY FOR AN INDIVIDUAL
SHAREHOLDER OR JOINT SHAREHOLDERS OR BY AN OFFICER OR OFFICERS OR ATTORNEY
OF A CORPORATE SHAREHOLDER NOT UNDER ITS CORPORATE SEAL, THE INSTRUMENT SO
EMPOWERING THE OFFICER OR OFFICERS OR ATTORNEY, AS THE CASE MAY BE, OR A
NOTARIAL COPY THEREOF, SHOULD ACCOMPANY THE INSTRUMENT OF PROXY. If these
instructions are not followed, the Chairman of the meeting may determine
that the Proxy is unacceptable.
4. The Instrument of Proxy will not be used at the meeting or any adjournment
thereof unless the same is deposited with the Company's transfer agent not
less than 48 hours, excluding Saturdays and holidays, before the time for
holding the Meeting or any adjournment thereof. Please mail, fax or
deliver your proxy to the Company's transfer agent at the following
address:
MONTREAL TRUST COMPANY OF CANADA
151 Front Street West
Suite 605
Toronto, Ontario
M5J 2N1
Attention: Proxy Department
5. If this proxy is not dated in the space provided, it shall be deemed to
bear the date on which it is mailed.
<PAGE>
- 2 -
April 15, 1998
Dear Shareholder:
I am pleased to invite you to attend the Special Meeting of Shareholders of
Consolidated Nevada Goldfields Corporation which will be held on Tuesday, May
12, 1998, at 9:00 a.m. (Toronto Time), at the offices of Stikeman, Elliott,
Commerce Court West, Suite 5300, 199 Bay Street, Toronto, Ontario M5L 1B9. I
hope that you are able to attend the meeting.
The Notice of Special Meeting and Management Information Circular covering
the formal business of the meeting and the related Proxy are enclosed.
If you are unable to attend this meeting, please carefully consider the
enclosed material and then complete and return your Proxy in the envelope
provided. A prompt response will ensure your vote is counted.
Sincerely,
(signed)
Jorge E. Ordonez
Acting President and
Chief Executive Officer
<PAGE>
- 1 -
SCHEDULE "A"
1) SHARE CONSOLIDATION RESOLUTION
BE IT RESOLVED THAT:
1. The issued common shares of the Company be consolidated on a ten
(old) for one (new) basis so that the issued common shares of the
Company is consolidated from 360,957,284 common shares to 36,095,728
common shares, and all entitlements to fractions be rounded down to
the next whole number.
2. Any one director or officer or other person duly authorized by the
Company be and he is hereby authorized and directed to execute and
deliver all such deeds, documents, instruments and assurances and to
do all such acts and things as in his opinion may be necessary or
desirable to give effect to this resolution.
2) NAME CHANGE RESOLUTION
BE IT RESOLVED THAT:
1. The name of the Company be changed from "Consolidated Nevada
Goldfields Corporation" to "Real del Monte Mining Corporation", or
such other name as decided upon by the directors of the Company and
acceptable to the Registrar of Companies under the CANADA BUSINESS
CORPORATIONS ACT and The Toronto Stock Exchange, and the Company's
Articles be amended accordingly.
2. Any one director or officer or other person duly authorized by the
Company be and he is hereby authorized and directed to execute and
deliver all such deeds, documents, instruments and assurances and to
do all such acts and things as in his opinion may be necessary or
desirable to give effect to this resolution.
<PAGE>
[LOGO]
151 Front Street West, Toronto, Ontario M5J 2N1 Tel.: (416) 981-9500 Fax: (416)
981-9800 April 16, 1998
To: Alberta Securities Commission Ontario Securities Commission
British Columbia Securities Commission Yukon Securities Commission
Manitoba Securities Commission NASDAQ
New Brunswick Securities Commission The Toronto Stock Exchange
Newfoundland Securities Commission
Nova Scotia Securities Commission
Northwest Territories Securities Commission
Prince Edward Island Securities Commission
Quebec Securities Commission
Saskatchewan Securities Commission
Dear Sir/Madam:
Subject: Consolidated Nevada Goldfields Corporation
We confirm that the following English material was mailed by pre-paid mail on
April 15, 1998 to the registered shareholders of the Common shares of the
subject Corporation:
1. Shareholder Letter
2. Notice of Special Meeting of Shareholders/Information Circular
3. Instrument of Proxy
4. Return Envelope
We further confirm that copies of the above mentioned material, together with
Supplemental Mail List cards, were sent by courier on April 15, 1998 to each
intermediary holding shares of the Corporation who responded to the search
procedures pursuant to Canadian securities Administrators' National Policy
Statement No. 41 regarding shareholder communication.
In compliance with regulations made under the Securities Act, we are providing
this material to you in our capacity as agent for the subject Corporation.
Sincerely,
Jeffery Carrabs
Assistant Account Manager
(416) 981-9529
(416)981-9800
